CrossBoundary Energy Access launches new investment vehicle for mini-grids in Africa

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On January 24, CrossBoundary Energy Access (CBEA), Africa’s first project financing facility for mini-grids, announced its launch, with funding commitments from The Rockefeller Foundation and Ceniarth.

CrossBoundary Energy Access will initially invest $16 million into mini-grids serving 170,000 people, providing first-time power to homes and businesses. The focus is on markets with supportive mini-grid regulatory frameworks, such as Tanzania, Nigeria, and Zambia.

CrossBoundary Energy Access has an innovative blended finance structure that demonstrates a pathway to unlocking more than $11 billion dollars for mini-grids needed from investors to connect at least 100 million people.

Over 600 million people in Sub-Saharan Africa still lack access to electricity. CrossBoundary conservatively estimates that at least 100 million of these people can be most cost effectively served by mini-grids today, and that using private sector development and investment could accelerate the buildout of those grids.

However, so far, private sector mini-grids have not attracted the needed funding. Like all energy infrastructure projects, mini-grids require a significant upfront investment while delivering predictable returns over a 10–15 year period. To scale, the capital provided must be long-term, affordable and accept lower yield returns. Operating in an emerging asset class with smaller balance sheets, mini-grid companies have so far struggled to raise that kind of financing.

CrossBoundary Energy Access bridges the gap to commercial scale, allowing private capital to invest today by blending it with patient equity from impact-first investors such as Ceniarth and development-focused debt from institutions such as The Rockefeller Foundation. The facility also allows private investors to invest in the projects themselves, similar to how most of the world’s 1,000 gigawatts of wind and solar projects have been financed.

Private sector capital and private sector mini-grids have an essential role to play in achieving Sustainable Development Goal 7 (SDG7): Ensure access to affordable, reliable, sustainable and modern energy for all. CrossBoundary Energy Access is seeking additional equity investment to expand this blended finance vehicle that provides both social and financial returns.

Shell Foundation and UK aid, through the Transforming Energy Access programme, provided support to design and launch CrossBoundary Energy Access.

Source: Cross Boundary Energy Access

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